Whenever a trailblazing startup comes on the scene, it is likely to be volatile. A case in point is Meta Materials (NASDAQ:MMAT), as MMAT stock traders have seen breathtaking highs and devastating lows.
I’ll be the first to admit that Meta Materials’ shares aren’t for everybody. The stock moves rapidly, to be sure, and some folks might even call it a meme stock.
However, a small position in MMAT stock could yield outstanding returns. As we’ll see, Meta Materials is a company in a future-facing niche market, and it has posted some highly encouraging financial data.
So by all means, feel free to open up your mind and your trading account to this Canadian industrial business with a bold spirit. No guts, no glory, as they say.
A Closer Look at MMAT Stock
Just to give you a bit of background, Torchlight Energy Resources merged with Metamaterials on June 28 to form Meta Materials.
Consequently, TRCH stock disappeared and MMAT stock started trading on the Nasdaq Exchange.
This was a big deal because now, investors could more easily take a position in a uniquely niche-oriented business.
As Meta Materials President and CEO George Palikaras explained, his company became “the first NASDAQ-listed metamaterials company, joining the world’s premier exchange for technology companies.”
That’s exciting for investors, but there’s also a cautionary lesson that they should learn from this episode.
Prior to the merger, the TRCH/MMAT stock price had surged to a 52-week high of $21.76. Unfortunately, traders who chased the stock were harshly punished.
Incidentally, it’s easy to see how the name got its meme-stock reputation. After all, it’s entirely possible that Reddit traders contributed to the jaw-dropping rally that took MMAT stock from less than $5 to more than $20.
In any case, the collapse of the shares was painful to witness. By mid-September, the stock had fallen back to $5.
The Material Facts
So are we looking at dead money or a stock that’s worth buying on the dip now?
I believe that taking a relatively small position in Meta Materials is worthwhile for those who can handle the shares’ wild swings.
But first, you’ll need to understand what you’re investing in. What are meta materials, anyhow? To put it as simply as possible, meta materials are a subset of functional materials.
They’re composite structures which consist of conventional materials like metals and plastics. Modifications provide these materials with new or enhanced properties. As a result, they might exhibit properties that aren’t usually seen in natural materials. The potential applications of meta materials span multiple industries, including automotive, aerospace/defense, consumer electronics, healthcare and energy.
Impressively, Meta Materials has a total of 82 patents and 67 pending patent applications. Have these patents translated to actual revenues, though?
The answer is, “definitely yes.” Everyone can have an opinion, but the data doesn’t lie: during the second quarter, Meta Materials’ total revenues grew 197% year-over-year. And in the first half of the year, Meta Materials’ total revenues increased 88% YOY.
Really, though, these figures could potentially get even bigger in future earnings periods. That’s because, in the firm’s shareholder letter, Palikaras, the company’s CEO, teased some apparently in-progress deals with big-money original equipment manufacturers (OEMs).
To be more precise, Palikaras asserted that Meta Materials “is currently pursuing multi-year, multi-million-dollar contracts with several OEMs.”
So it sounds like there may be more revenue sources in the works for the company. For now, however, we’ll have to stay tuned and see how it all pans out.
The Bottom Line
At the end of the day, Meta Materials has proven its ability to generate strong revenues in a future-facing niche market. And by getting listed on the Nasdaq Exchange, Meta Materials has made it easier for investors to buy shares of a company in the functional-materials market.
Just remember that MMAT stock is a fast mover, in both directions.
Still, if you can tolerate the shares’ volatility, their risk-reward profile looks favorable – and a return to $20 might be in store.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.